Keppel T&T

Keppel T&T: CIMB issued an O/PF report with TP: $1.65. Keppel T&T has been aggressively expanding its core operation ,with 4 new logistics facilities and a third data centre slated to open in FY14-15 which will allow earnings profile to rely more on core businesses vs investment in M1. The 4 new facilities will add 144,000sm of warehouse space to the current 229,000sm of space owned by Keppel T&T and its subsidiaries. Given the sheer size of these new facilities, the house forecasts y/y logistics revenue growth of 16-30% in FY14-15 and expects the logistics segment to contribute to 39-45% of earnings growth forecasts for FY14-15. The third data centre, Keppel Datahub 2, will add 6,000sm to the current 12,300sm of data centre space that Keppel T&T runs in Singapore, and expects data centres to contribute to 31% of earnings growth forecasts in FY14-15 Valuations are currently undemanding at 10.1x rolling fwd P/E, 1 s.d below historical mean of 11.8x.